UN meeting seeks reform of investment treaties

More than 50 high-level representatives from governments, the private sector and civil society convened in Geneva, Switzerland on 16 October to address the challenges arising from international investment agreements (IIAs) and consider ways to reform the international investment policy regime at a UN meeting held during UNCTAD’s World Investment Forum at the Palais des Nations.

The meeting took place against the backdrop of growing dissatisfaction regarding the more than 3,000 existing IIAs, as well as public debate surrounding so-called “mega-regional” agreements such as the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP).

Existing treaties, and negotiations for new ones, have come under criticism, with opponents arguing that they constrain governments’ regulatory powers and give excessive rights to international corporations. According to UN records, investors’ use of such treaties has led to more than 560 international arbitrations against governments, often resulting in awards of significant financial compensation. “UNCTAD offers a unique platform for exchange for all countries engaged in the process of improving their investment regime,” Mr. Rupert Schlegelmilch, Director of the European Commission’s Directorate in charge of international investment negotiations, said.

Participants of the high-level meeting called upon the UN body to look into comprehensive reform of the IIA regime.

“UNCTAD provides the policy know-how for moving from the traditional investor-centric model to the new sustainable development model”, Ms. Niki Kruger, Chief Director, International Trade and Economic Development Division, Department of Trade and Industry (DTI), South Africa, a country that has faced international investor claims challenging a number of post-apartheid policies, and has since officially withdrawn from some IIAs.

Reforms suggested by UNCTAD would support governments when updating their model agreements and when negotiating new IIAs. They could also guide regional and inter-governmental organizations and arbitration institutions in their reform efforts.

“When it comes to reform, States – as the masters of the treaties – need to make decisions and undertake actions. UNCTAD can offer them the technical support and the platform they need, ” Mr. James Zhan, Director of UNCTAD’s Division on Investment and Enterprise, said. “We have long discussed the challenges – it is now time to move towards concrete solutions. I am glad that this meeting sketched the contours of a road-map towards making the IIA regime work better for sustainable development.”, he added.

Channelling investment to the sustainable development goals (SDGs) is today’s central policy challenge, and the overarching theme of the World Investment Forum that hosted the IIA Conference.

“It is paramount that reform efforts are inclusive and transparent,” said Ms. Nathalie Bernasconi-Osterwalder, Director of the Economic Law and Policy Group of the International Institute for Sustainable Development (IISD), one of the think thanks that joined the debate.

“Most countries acknowledge that their investment policies are in need of reform to alleviate concerns related to investment dispute settlement and public policymaking. What we miss is a framework to implement their efforts,” said Ms. Wafaa Sobhy Ibrahim, Vice Chairman, General Authority for Investment (GAFI), Egypt.

Other stakeholders similarly expressed their desire for reform and stressed UNCTAD’s contribution to identifying avenues for change.

“The future of the IIA regime is also important for the private sector: IIAs needs to function better for governments and investors alike,” said Ms. Stormy-Annika Mildner, Head of Department External Economic Policy, Federation of German Industries, (BDI), “We stand ready to work with the international community during the reform process and support UNCTAD’s efforts,” she added.

Ms. Meg Kinnear, Secretary-General of the International Centre for Settlement of Investment Disputes (ICSID), which administers the majority of investor-State arbitrations, chaired one of the sessions. “ICSID is committed to supporting member States and UNCTAD in their examination of reform efforts and will bring its experience in investment dispute settlement to this discussion.”

The debate will continue at an UNCTAD Expert Meeting at 25-27 February 2015 in Geneva, Switzerland.

More information regarding trends and reform of the IIA regime and a database with the IIA texts can be found on UNCTAD’sInvestment Policy Hub.